Fee Award Tossed in Qui Tam Case Opposed by Government

Tuesday, April 7, 2026

Page 3

Ninth Circuit:

Fee Award Tossed in Qui Tam Case Opposed by Government

Court Declares That Judge Erred in Applying 1.75 Multiplier Despite ‘Herculean’ Efforts, Saying That Award of Lodestar Amount Adequately Compensated Lawyers for Extensive Efforts, Drawing Dissent

By a MetNews Staff Writer

The Ninth U.S. Circuit Court of Appeals yesterday upended a $4.4 million fee award which a judge reached after applying a 1.75 a multiplier due to the “exceptional result” obtained by a small firm, with the majority acknowledging that there were “Herculean” efforts to keep a qui tam action alive against the will of the government, but saying that the lodestar calculations compensated the attorneys for the thousands of hours of work.

A dissent accuses the majority of setting the exception as the norm.

Circuit Judge Patrick J. Bumatay wrote yesterday’s opinion, acknowledging that the case was “unprecedented” in that the California plaintiff successfully defeated the government’s efforts to have the claims, filed on its behalf under the False Claims Act (“FCA”) against a mortgage lender with offices throughout the state, dismissed. However, he declared:

“This is not the ‘rare and exceptional’ case that overcomes the ‘strong presumption that the lodestar is sufficient.’…The district court provided two reasons for awarding…a 1.75 multiplier for [the firm’s] merits work. First, the district court cited the ‘exceptional result’ that [the lawyers] achieved in surviving the motion to dismiss, ‘notwithstanding the Government’s attempts to extinguish [the case].’ Second, the district court attributed the firm’s successful defense against dismissal to ‘[the firm’s] investigative work.’ Because these considerations were adequately subsumed in the lodestar calculation, it was an abuse of discretion to grant the multiplier.”

District Court Judge J. Campbell Barker of the Eastern District of Texas, sitting by designation, joined in the opinion, and Circuit Judge Milan D. Smith dissented in part, saying:

“The majority discounts as ordinary diligence what the district considered to be superior attorney performance that achieved an extraordinary result in the face of ‘stacked odds.’ Where attorneys go above and beyond the ordinary levels of competence, diligence, and zealous advocacy, district courts have discretion to fashion an attorney’s fee award that reflects the ‘true market value’ of their performance….”

Interest Accrual

In a separate opinion, also filed yesterday and authored by Bumatay on behalf of the same panel, the court tackled the question of whether post-judgment interest on an attorney fee award accrues from the time of the entry of judgment recognizing entitlement to such a recovery or from the date of a later order settling the amount.

Deepening a circuit split on the topic, the court said that “[t]his case involves the interplay” of the FCA, which authorizes successful realtors to recover reasonable fees, and a federal statute, 28 U.S.C. §1961, which provides that “interest shall be calculated from the date of the entry” of a “money judgment.”

Citing case law establishing that a judicial action only qualifies as a “money judgement” if it sets forth a “definite” designation of “the amount which plaintiff is owed by defendant,” Bumatay said that the decisions allowing interest to accrue from a judgment declaring the entitlement to some unspecified amount of fees ignore the plain language of §1961 and wrote:

“We…decline to depart from our requirement of ‘a definite and certain designation of the amount…’ before starting the accrual of postjudgment interest….Several of our sister circuits share our conclusion.”

False Certification

The question arose after Gwen Thrower sued her former employer, Academy Mortgage Corporation, in 2016, asserting that the company falsely certified compliance with a federal program under which lenders may underwrite residential loans for government insurance to ensure that the U.S. government would foot the bill for any defaults.

Representing Thrower was the small, New York law firm Thomas & Solomon LLP (“T&S”). The government declined to intervene in the qui tam action, telling the legal team that there was too little evidence of systemic fraud.

Undeterred, the attorneys compiled hundreds of pages of contact information for former employees and conducted detailed interviews regarding underwriting practices. After an amended pleading was filed in April 2017, the U.S. government filed a motion under 31 U.S.C. § 3730(c)(2)(A), which specifies that “[t]he Government may dismiss the action notwithstanding the objections of the person initiating the action” upon notice and hearing on the matter.

In June 2018, District Court Judge Edward M. Chen of the Northern District of California (now on senior status) declined to dismiss, noting that “that once the Government declines to intervene…, it must demonstrate ‘good cause’ in order to intervene subsequently” and that it “did not fully investigate the amended complaint.”

Settlement Approved

On Jan. 27, 2023, Chen approved a settlement of $38.5 million, of which $11.5 would go to Thrower, subject to a contingency agreement with T&S and a Texas firm hired to help negotiate, and preserved the plaintiff’s claims for fees. In May 2024, he awarded Thrower $8.6 million in fees plus expenses, saying in the order:

“[T]he Court finds that a multiplier is appropriate, but the [requested] 2.0 multiplier…is not warranted….Though T&S achieved an exceptional result and did undertake a substantial litigation risk, …the firm took a lesser role as the suit progressed, was not primarily responsible for negotiating the settlement, and the risk it took was counterbalanced…by the…contingency agreement….Accordingly, to account for T&S’s…heroic work that kept this case alive…—but in consideration of the aforementioned mitigating factors—the Court finds a 1.75 upward multiplier appropriate, applied only to T&S merits work.”

Of the total recovery, T&S was awarded $7,798,146.44, reflecting $4,374,532.25 multiplied by 1.75, and the Texas-based firm Reese Marketos LLP was awarded $142,715.

A few months later, the judge granted a motion for post-judgment interest. Academy challenged the multiplier portion of the fee order, and Thrower appealed the interest decree.

Lodestar Multiplier

Noting that “[a] multiplier may be awarded only upon ‘specific evidence’ that the lodestar fee is ‘…unreasonably high,’ ” Bumatay pointed out that it is an abuse of discretion for a court to enhance a fee award based on factors that are already taken into account in determining the lodestar amount.

He acknowledged that the case was “unprecedented” because “no court had ever permitted a qui tam action to proceed against the government’s wishes,” but said:

“Without more, this doesn’t amount to ‘specific evidence’ justifying a multiplier. Ordinarily, the ‘novelty or complexity of the issues should not be considered at the multiplier stage.’…[T]he complexity in battling two parties at once should be ‘fully reflected in the number of billable hours recorded by counsel.’ ”

Saying that while “superior results” may justify a fee enhancement, he noted that the multiplier is only appropriate in those circumstances if the lodestar calculation does not adequately reflect the performance. Applying that standard, he opined:

“The district court made no finding that any circumstance left the lodestar calculation unreasonably low. The district court didn’t find that T&S risked an extraordinary outlay of expenses, endured an exceptionally protracted litigation, or suffered an exceptional delay in payments. Nor did the district court believe that the lodestar calculation undervalued T&S’s ‘true market value.’ ”

Investigative Work

Addressing the investigative work expended by T&S attorneys to keep the case alive, he remarked:

“While these Herculean efforts clearly led to the denial of the government’s motion to dismiss and the eventual settlement of this case,….the district court…granted the firm around 7,000 hours of billable work for its efforts—or around 875 workdays….[N]othing shows that these massive billables don’t properly account for T&S’s…work.”

He continued:

“We agree with the dissent that district court judges may apply an enhancement for an ‘exceptional result.’…The flaw in the district court’s analysis was not a failure to adequately show an exceptional result or extraordinary investigative efforts. The critical issue is that it didn’t provide specific evidence for why the lodestar method could not reflect T&S’s true market rate.”

The jurist concluded that “the district court abused its discretion by failing to provide a reasoned basis for its selection of a 1.75 multiplier” and declared:

“[W]e reverse the award of a multiplier and remand.”

Miller’s View

Saying that “I agree that the district court abused its discretion by imposing a 1.75 multiplier without a ‘reasonably specific explanation’ for that particular multiplier, Miller asserted:

“The majority acknowledges that T&S’s investigative efforts were ‘Herculean,’…, but it minimizes that T&S—like Hercules—successfully fought [the mythological god] Cerberus. I would hold that the district court did not abuse its discretion by concluding that this is the ‘rare’ and ‘extraordinary’ circumstance that warrants an enhancement.”

The jurist added:

“We do not hold all attorneys that practice before us to an extraordinary standard; doing so would turn the exception into the norm.”

The cases are Thrower v. Academy Mortgage Corporation, 24-4103 and 24-6247.